Is Medivation's Congressional Letter Just Noise?

Canaccord Genuity’s John Newman maintained a Hold rating on Medivation Inc MDVN, with a price target of $45.

March-In Hearing

“We do not expect any meaningful price changes for Xtandi based on a request from six US senators for a public hearing to consider "march-in" authority of the NIH. Importantly, in Bayh-Dole's 35-year history, the NIH has rejected all petitions it has received to exercise march-in rights,” Newman mentioned.

Newman explained that the NIH was allowed by the march-in authority to grant patent license to competitors in the event that there was a threat to public safety of in case the requirements for public use were not being met, apart from other factors.

Xtandi Pricing

However, despite Xtandi’s pricing, Newman does not believe that it poses any risk to public health. In fact, the analyst stated that “Xtandi improves public health.”

Although NIH had earlier been petitioned for a march-in hearing on Xtandi and might grant the hearing, although there was “minimal likelihood for changes in the US Xtandi price.”

Comparison Unwarranted

Newman also pointed out that in comparison to Ritonavir, an HIV drug that is reimbursed primarily through Medicaid and is used by recipients who are young and often unable to pay, Xtandi, which is also reimbursed mainly through Medicaid, is used by older people, often with significant savings.

This makes the comparison letter unwarranted, Newman said, while adding, “The reason for congressional pressure on drug pricing is the medicare copay, not the price of drugs to the healthcare system.”